Question

A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?

Answer 1

The city manager is right.

Step-by-step explanation:

• A municipal swimming pool is an example of a public good.
• According the the demand schedule curve, public goods are in high demand when the prices are low compared to when the prices are high.
• Therefore, to solve the problem of more revenue collection, then the town administrators should lower the price of this public facility, this shall result to high demand, and hence high revenue.